Email this article

Tribune Publishing has rejected Gannett’s improved takeover offer as it erected another obstacle for its suitor by selling a $70 million stake to billionaire Patrick Soon-Shiong.

Gannett last week upped its bid for the owner of the Los Angeles Times and Chicago Tribune to $15 per share from $12.25. But Tribune said Monday its board had determined the new proposal was not in the best interests of shareholders.

Recommended Stories:

“We continue to have serious doubts about Gannett’s ability to enter into a transaction — especially when you consider its approximate $650 million pension and [other retirement benefits] liability — that makes sense for Tribune and its stakeholders,” Tribune CEO Justin Dearborn said in a news release.

He added that Tribune is “ready to work with Gannett to assess whether there is a path forward that will create more value for both sets of shareholders.”

But Tribune also disclosed Monday it had sold 4.7 million newly issued shares at $15 apiece to Soon-Shiong’s Nant Capital. The deal means that nearly 30% of Tribune shares are now controlled by company Chairman Michael Ferro and Soon-Shiong, both of whom oppose a Gannett takeover.

“The best [Gannett] can do is accumulate stock in the open market, then wage another war in a year,” analyst Hamed Khorsand of BWS Financial told the Los Angeles Times. “That’s all they can do.”

Reacting to Monday’s developments, the publisher of USA Today said Tribune Publishing “has continued to take actions that Gannett believes are designed to convey disproportionate control of the enterprise to select stockholders while ignoring its duties to all Tribune stockholders.”

The revised offer values Tribune at about $479 million. Gannett has offered to assume about $385 million of Tribune’s debt, valuing the total deal at about $864 million.

Soon-Shiong, a healthcare entrepreneur, is paying almost double what Ferro paid for 16.6% of Tribune in February. Dearborn and Ferro are pushing a technology-focused strategy to increase the company’s online revenue.